What You Need to Know About Cosigning a Mortgage
If your credit, debt, or income isn’t quite enough to qualify on your own, a cosigner could help. But cosigning carries significant responsibilities for both parties.
What Does a Cosigner Do?
A cosigner applies for the mortgage alongside you and agrees to take responsibility for the loan if you can’t make payments. Their income, credit, and assets are used in addition to yours to qualify for the loan.
Benefits
A cosigner with strong credit and income can help you qualify for a larger loan or better interest rate. This is common for first-time buyers whose income alone falls short of qualification thresholds.
Risks for the Cosigner
Full liability. The cosigner is equally responsible for the entire mortgage balance. Late or missed payments affect their credit score too.
Borrowing capacity. The cosigned mortgage appears on their credit report, potentially limiting their ability to borrow for their own needs.
Relationship strain. Financial obligations can create tension between family members or friends.
Alternatives to Cosigning
FHA loans with lower credit requirements, down payment assistance programs, rent-to-own agreements, or simply waiting 6-12 months to improve your own credit and savings. QuickFund Mortgage can explore all options with you before pursuing a cosigner.